Case Law Details
Jasjit Singh Vs Union of India And Others (Punjab and Haryana High Court)
Statutory provisions under Sections 148 and 144B prevail over administrative instructions or circulars: P&H HC
The Punjab and Haryana High Court recently delivered a significant judgment in a batch of writ petitions concerning the issuance of reassessment notices under Section 148 of the Income Tax Act, 1961, post the implementation of the faceless assessment regime. The judgment reiterates the supremacy of statutory provisions over administrative instructions, offering clarity on jurisdictional authority in reassessment cases.
Background of the Case
The petitioners challenged the reassessment notices issued by the Jurisdictional Assessing Officer (JAO) under Section 148, arguing that the introduction of the faceless assessment scheme under Section 144B mandated such notices to be issued by the National Faceless Assessment Centre (NFAC). The primary contention was that these actions violated the amendments introduced through the notification dated March 29, 2022.
The petitioners also questioned the legality of the approvals granted under Section 151 of the Act, asserting that these should align with the faceless assessment mechanism.
Government’s Arguments
The counsel for the Revenue contended that reassessment notices could still be issued by the JAO for specific cases, such as those involving search and seizure. Referring to the Office Memorandum dated February 20, 2023, and a circular issued on January 19, 2024, the Revenue argued that these administrative instructions were issued to ensure efficient tax administration.
The counsel further stated that Sections 119 and 120 of the Act empower the Central Board of Direct Taxes (CBDT) to issue directions for effective implementation of the law. However, they maintained that these instructions supplemented, rather than supplanted, the statutory provisions.
Petitioners’ Stand
The petitioners contended that allowing the JAO to issue reassessment notices undermined the faceless assessment scheme, which was intended to eliminate subjectivity and ensure transparency. They emphasized that statutory provisions under Sections 148 and 144B, read with Section 151A, explicitly required such actions to be conducted through the NFAC.
The petitioners argued that administrative instructions could not override statutory mandates. Citing judgments from other High Courts, they highlighted the principle that assessment proceedings commence from the issuance of a show cause notice under Section 148, which falls under the ambit of faceless assessment.
Court’s Findings
After considering the arguments and reviewing judgments from High Courts in Telangana, Bombay, and Gauhati, the Punjab and Haryana High Court upheld the principles established by the Coordinate Bench in its earlier rulings. The court reiterated that:
- Supremacy of Statutory Provisions: Administrative instructions or circulars cannot override the statutory provisions under Sections 148 and 144B.
- Faceless Assessment Mandate: The faceless assessment scheme applies from the stage of issuing show cause notices under Section 148 and includes reassessment proceedings.
- Binding Nature of Notifications: The court referred to the notification dated March 29, 2022, under Section 151A, which mandated the automatic allocation of reassessment cases to NFAC, leaving no room for jurisdictional officers to intervene.
Judgment
The High Court quashed the reassessment notices issued by the JAO, declaring them non-compliant with statutory provisions. It ruled that reassessment proceedings must align with the faceless assessment framework. The court, however, granted the Revenue the liberty to initiate proceedings afresh in accordance with the prescribed legal procedure.
The judgment emphasized that while the CBDT has the authority to issue administrative directions under Sections 119 and 120, such instructions must not contravene the intent and language of statutory provisions.
Implications
The decision underscores the importance of adhering to legislative mandates and reinforces the principle that administrative instructions cannot dilute statutory provisions. It also sets a precedent for other courts addressing similar disputes, particularly concerning the faceless assessment scheme.
Conclusion
This ruling by the Punjab and Haryana High Court is a significant step in clarifying the scope and application of the faceless assessment scheme under the Income Tax Act. By prioritizing statutory provisions over administrative directives, the judgment upholds the transparency and objectivity intended by the scheme, ensuring consistency in tax administration.
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
1. These bunch of writ petitions raise common question of law that ‘as to whether the Jurisdictional Assessing Officer (hereinafter referred to as ‘the JAO’) is empowered to issue notice under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act, 1961’), after the new regime of faceless assessment has been brought into force by the amendment made under Section 148 of the Act, 1961.
2. In the bunch of these writ petition, admittedly notice was issued by the JAO for re-assessment re assessment after 01.04.2021 and further approval order passed under Section 151 of the Act, 1961, have also been impugned.
3. The challenge in most of the cases is the ground that it should have been issued by the National Faceless Assessment Centre and the proceedings also ought to have been conducted by the same authority in terms of notification dated 29.03.2022. This Court passed interim order restraining the respondents from passing any final order.
4. Learned counsel appearing for the petitioners have invited attention to the fact that the issue issue stands already adjudicated finally by the Coordinate Bench vide its judgment pronounced on 19.07.2024, in CWP CWP–15745-2024 2024 and CWP-15791-2024.
5. Per contra, contra, it is the contention of counsel for the revenue that certain aspects have not been considered considered by the Coordinate Bench, which if considered by this Court, the same would result in a different interpretation.
6. In order to maintain judicial discipline and consistency, this Court would follow the judgment rendered by the Coordinate Bench (supra). However, as the learned counsel for the revenue had made further contentions, it would be in the interest of justice and to maintain the principle of right for hearing to the parties, after the notices had already been issued in these cases, we have heard the respective counsels and have respectfully gone through the judgment passed by the Coordinate Bench.
7. Learned counsels appearing for the revenue state that the office memorandum issued on 20.02.2023 and the order dated 19.01.2024, were neither challenged lenged by any of the assessees in the proceedings nor it can be said to be overwriting the statutory provisions and submit that the orders have been issued keeping in view the provisions contained in Section 144B of the Act, 1961, which only refers to the method and manner in which faceless assessment shall be done and does not exclude the power to issue notice under Section 148 of the Act, 1961 by the JAO.
Mr. Putney, learned Senior Standing Counsel has argued that Section 119 of the Act, 1961, empowers the board to issue such orders and instructions as have been issued vide office memorandum dated 20.02.2023 and circular dated 19.01.2024. He submits that the cases type high CRUI/VRU information have been assigned to the JAO as cases relating to search and nd seizure ought to be looked into and examined by the JAO for the purpose of issuing of notice under Section 148 of the Act, 1961. It is his submission that after considering the scope of the scheme as notified in 2022, the Government of India had issued the office memorandum. He submits that the scope and power as available avail under the aforesaid provisions as also under Section 120 of the Act, 1961, which expresses jurisdiction of income tax authorities to issue instructions, has not been considered by the Coordinate Bench while deciding the cases (supra) and this Court ought to examine the same.
8. Learned counsel for the petitioners on the other hand submit that the very purpose of providing faceless assessment scheme, would stand negated if the respondents respondents are allowed to use the power available under Sections 119and 120 of the Act, 1961, to issue circulars or orders resulting in the amendments made in Sections 148 and 144B of the Act, 1961, as redundant. It is submitted that the powers contained in Section 119 or under Section 120B will have to be inconformity with the scheme of the Act.
9. We have considered the submissions.
10. The Coordinate Bench after noticing the judgments passed by the Division Bench of the Telengana, Telengana, Calcutta, Bombay and Guwahati High Courts passed the order in CWP-15745-2024 CWP 2024 and CWP CWP-15791-2024.
11. This Court has also considered the provisions contained under Section 148, 151A of the Act, 1961 and the e-assessment e assessment scheme introduced vide notification dated 29.03.2022. The Central Central Government in terms of powers conferred under Section 151Aof the Act, 1961, had introduced the assessment assessment of Income Escaping Assessments Scheme 2022, which as per Section 3 and connected cases.
mandated assessment, re-assessment re and re-computation computation under Section 147 of the Act and issuance of notice under Section 148 of the Act through automatic allocation. The Coordinate Bench has already considered the provision and passed the following order:-
15. From the perusal of Section 151A, it is quite evident that scheme of faceless faceless assessment is applicable from the stage of show cause notice under Section 148 as well as 148A. Clause 3
(b) of notification dated 29.03.2022 issued under Section 151A clearly provides that scheme would be applicable to notice under Section 148. Even Even otherwise, it is a settled proposition of law that assessment proceedings commence from the stage of issuance of show cause notice. The object of introduction of faceless assessment would be defeated if show cause notice under Section 148 is issued by Ju Jurisdictional redactional Assessing Officer.
The respondents are heavily placing reliance upon office memorandum and letter issued by departmental authorities. It is axiomatic jurisprudence that circulars, instructions and letters issued by Board or any other authority cannot override statutory provisions. The circulars are binding upon authorities and Courts are not bound by circulars. The mandate of Section 144B, 151A read with notification dated 29.03.2022 issued thereunder is quite lucid. There is no ambiguity in the language of statutory provisions, thus, office memorandum or any other instruction issued by Board or any other authority cannot be relied upon. Instructions/circulars can supplement but cannot supplant statutory provisions.
16. In the wake of above discussion and findings, we find it appropriate to subscribe view expressed by Bombay, Telangana and Gauhati High Court. The instant petitions deserve to be allowed and accordingly allowed.
17. The notices issued by Jurisdictional Assessing Officer under Section 148 are hereby quashed with liberty to respondent to proceed in accordance with procedure prescribed by law.
11. Section 119of the Act, 1961, provides as under:
“119. Instructions to subordinate authorities:-
(1) The Board may, from time to time, issue such orders, instructions and directions to other income income-tax tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board.
Provided that no such orders, instructions or directions shall be issued.
(a) so as to require any income income-tax tax authority to make a particular assessment or to dispose of a particular case in a particular manner:-
(b) so as to interfere with the discretion of the Commissioner (Appeals) in the exercise of his appellate functions.
(2) Without prejudice to the generality of the foregoing power.
(a) the Board may, if it considers it necessary or expedient so to do, for the purpose of proper and efficient management of the work of assessment and collection of revenue, issue, from time to time (whether by way of relaxation of any of the provisions of sections 3[115P, 115S, 115WD, 115WE, 115WF, 115WG, 115WH, 115WJ, WJ, 115WK,] [139,] 143, 144, 147, 148, 154, 155[158BFA], [sub-section section (1A) of section 201, sections 210, 211, 234A, 234B, 234C [234E], [270A,] 271 [271C, 271CA] and 273 or otherwise), general or special orders in respect of [any class of incomes or fringe benefits] or class of cases, setting forth directions or instructions (not being prejudicial to assessees) as to the guidelines, principles or procedures to be followed by other income income– tax authorities in the work relating to assessment or collection of revenue or the initiation of proceedings for the imposition of penalties and any such order may, if the Board is of opinion that it is necessary in the public interest so to do, be published and circulated in the prescribed manner for general information;
(b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise [any income-tax tax authority, not being a Commissioner (Appeals)] to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law;
[(c) the Board may, it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order for reasons to be specified therein, relax any requirement contained in any of the provisions of Chapter IV or Chapter VI-A, A, where the assessee has failed to comply with any requirement specified in such provision for claiming deduction thereunder, subject to the following conditions, namely.
(i) the default in complying with such requirement was due to circumstances bey beyond the control of the assessee; and
(ii) the assessee has complied with such requirement before the completion of assessment in relation to the previous year in which such deduction is claimed:
Provided that the Central Government shall cause every order issued under this clause to be laid before each House of Parliament.”
12. Section 120of the Act, 1961, lays down the jurisdiction of income tax authorities and provides as under:-
“xx xx xx xx
(5) The directions and orders referred to in sub sub-sections sections (1) and (2) may, wherever considered necessary or appropriate for the proper management of the work, require two or more Assessing Officers (whether or not of the same class) to exercise and perform, concurrently, the powers and functions in respect of perform, any area or persons or classes of persons or incomes or classes of income or cases or classes of cases; and, where such powers and functions are exercised and performed concurrently by the Assessing Officers Officers of different classes, any authority lower in rank amongst them shall exercise the powers and perform the functions as any higher authority amongst them may direct, and, further, references in any other provision of this Act or in any rule made thereunder thereunder to the Assessing Officer shall be deemed to be references to such higher authority and any provision of this Act requiring approval or sanction of any such authority shall not apply.
(6) Notwithstanding anything contained in any direction or order issued used under this section, or in section 124, the Board may, by notification in the Official Gazette, direct that for the purpose of furnishing of the return of income or the doing of any other act or thing under this Act or any rule made thereunder by any person or class of persons, the income income-tax tax authority exercising and performing the powers and functions in relation to the said person or class of persons shall be such authority as may be specified in the notification.”
13. Section 144Bof the Act, 1961, as substituted w.e.f. 01.04.2022, has substituted sub-section sub 128 which has been inserted w.e.f 01.04.2022 while the faceless assessment provision inserted w.e.f. 01.04.2021 did refer to the returns which may have been submitted on notice under Section 148 of the Act, 1961, by the Assessing Officer. The amended provisions of Section 148B now does not refer to notice under Section 148 of the Act, 1961 and only deals with the manner in which the assessment by the National Faceless Assessment Centre is to be done.
14. It is apposite to quote Section 144B (7)of the Act, 1961, which reads as under:-
(7)(a) The Principal Chief Commissioner or the Principal Director General, as the case may be, in charge of the and connected cases.
Faceless Assessment Centre shall, in accordance with the procedure laid down by the Board in this regard, if he considers appropriate that the provisions of sub sub-section section (2A) of section 142 may be invoked in the case:-
(1) forward the reference received from an assessment unit under clause (xxxii) of sub-section section (1) to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner having jurisdiction over such case, and inform the assessment unit accordingly;
(ii) transfer the case to the Assessing Officer having jurisdiction over such case in accordance with sub sub-section section (8);
(b) where a reference has been received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner under sub sub-clause clause (1) of clause (a), he shall direct the he Assessing Officer, having jurisdiction over the case, to invoke the provisions of sub sub– section (2A) of section 142;
(c) where a reference has not been forwarded to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, having jurisdiction over the case, in a case referred to in sub sub– clause (1) of clause (a), the assessment unit shall proceed to complete the assessment in accordance with the procedure laid down in this section. (8) Notwithstanding anything contain contained in sub-section section (1) or sub section (2), the Principal Chief Commissioner or the sub-section Principal Director General, as the case may be, in in-charge charge of National Faceless Assessment Centre may, at any stage of the assessment, if considers consider necessary, transfer the case to the Assessing Officer having jurisdiction over such case, with the prior approval of the Board.”
15. Thus it is in the aforesaid two contingencies alone as provided under sub-Sections Sections 7and 8that the Principal Chief Commissioner or the Principal Director General, as the case may be, transfer the case to the Assessing Officer having jurisdiction over such case i.e. JAO. Thus, the power of transfer to the JAO is although available but it has to be exercised only in a particular case considering the facts and circumstances therein and not by way of general order as passed vide letter dated 19.01.2024.
16. We are in agreement with the view taken by the Coordinate Bench and hold that such circular or instructions by the Board could not have been issued to override statutory provisions or to make them otiose or obsolete. Legislative enactments having financial implications are required to be followed strictly and mandatorily. By exercising the powers contained in Sections 119 and 120 of the Act, 1961 as well as Section 144B (7 & 8), the authorities cannot be allowed to usurp the legal provisions to their own satisfaction and convenience causing hardship to the assessees. It also leaves confusion n in the minds of the taxpayers. In the opinion of this Court, instructions and circulars can be issued only for the purpose of supplementing the statutory provisions and for their implementation.
17. In view of the aforesaid discussion, there is no occasion to distinguish or take a different view as suggested by the learned counsel for the revenue from what has already been held by the Coordinate Bench.
18. Keeping in view the law laid down by the Coordinate Bench (supra), notices issued by the JAO under Section 148of the Act, 1961 and the and connected cases. proceedings initiated thereafter without conducting the faceless assessment as envisaged under Section 144B of the Act, 1961, have been found to be contrary to the provisions of the Act, 1961 and accordingly notices dated 28.02.2023, 16.03.2023, 20.03.2024 and 30.03.2023 and order dated 30.03.2023, are set aside for want of jurisdiction.
19. The respondents-revenue respondents would be, however, at liberty to follow the procedure as laid down under the Act, 1961 and proceed accordingly, if so advised.
20. All the writ petitions petition are allowed. The interim order passed by the Court shall stand merged with the present order.
21. No costs.
22. All pending misc. application(s) also stand disposed of.
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